Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: Pop Corporation Soda Company Item Debit Credit Debit Credit Cash & Accounts Receivable $ 15,400 $ 21,600 Inventory 165,000 35,000 Land 80,000 40,000 Buildings & Equipment 340,000 260,000 Investment in Soda Company 109,600 Cost of Goods Sold 186,000 79,800 Depreciation Expense 20,000 15,000 Interest Expense 16,000 5,200 Dividends Declared 30,000 15,000 Accumulated Depreciation $ 140,000 $ 80,000 Accounts Payable 92,400 35,000 Bonds Payable 200,000 100,000 Bond Premium 1,600 Common Stock 120,000 70,000 Retained Earnings 127,900 60,000 Sales 260,000 125,000 Other Income 13,600 Income from Soda Company 8,100 $ 962,000 $ 962,000 $ 471,600 $ 471,600 On December 31, 20X2, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3. During 20X3, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition. Required: a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Please help with below: Record the basic consolidation entry. Note: Enter debits before credits. Entry Accounts Debit Credit 1 Common stock Retained earnings Investment in Soda Company NCI in NI of Soda Company Dividends declared Investment in Soda Company NCI in NA of Soda Company Record the amortized excess value reclassification entry. Note: Enter debits before credits. Entry Accounts Debit Credit 2 Amortization expense Depreciation expense Income from Soda Company NCI in NI of Soda Company Record the excess value (differential) reclassification entry. Note: Enter debits before credits. Entry Accounts Debit Credit 3 Buildings and equipment Patents Accumulated depreciation Income from Soda Company NCI in NI of Soda Company

Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: Pop Corporation Soda Company Item Debit Credit Debit Credit Cash & Accounts Receivable $ 15,400 $ 21,600 Inventory 165,000 35,000 Land 80,000 40,000 Buildings & Equipment 340,000 260,000 Investment in Soda Company 109,600 Cost of Goods Sold 186,000 79,800 Depreciation Expense 20,000 15,000 Interest Expense 16,000 5,200 Dividends Declared 30,000 15,000 Accumulated Depreciation $ 140,000 $ 80,000 Accounts Payable 92,400 35,000 Bonds Payable 200,000 100,000 Bond Premium 1,600 Common Stock 120,000 70,000 Retained Earnings 127,900 60,000 Sales 260,000 125,000 Other Income 13,600 Income from Soda Company 8,100 $ 962,000 $ 962,000 $ 471,600 $ 471,600 On December 31, 20X2, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3. During 20X3, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition. Required: a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Please help with below: Record the basic consolidation entry. Note: Enter debits before credits. Entry Accounts Debit Credit 1 Common stock Retained earnings Investment in Soda Company NCI in NI of Soda Company Dividends declared Investment in Soda Company NCI in NA of Soda Company Record the amortized excess value reclassification entry. Note: Enter debits before credits. Entry Accounts Debit Credit 2 Amortization expense Depreciation expense Income from Soda Company NCI in NI of Soda Company Record the excess value (differential) reclassification entry. Note: Enter debits before credits. Entry Accounts Debit Credit 3 Buildings and equipment Patents Accumulated depreciation Income from Soda Company NCI in NI of Soda Company

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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	Pop Corporation		Soda Company
Item		Debit		Credit		Debit	Credit
Cash & Accounts Receivable		$	15,400					$	21,600
Inventory			165,000						35,000
Land			80,000						40,000
Buildings & Equipment			340,000						260,000
Investment in Soda Company			109,600
Cost of Goods Sold			186,000						79,800
Depreciation Expense			20,000						15,000
Interest Expense			16,000						5,200
Dividends Declared			30,000						15,000
Accumulated Depreciation					$	140,000				$	80,000
Accounts Payable						92,400					35,000
Bonds Payable						200,000					100,000
Bond Premium											1,600
Common Stock						120,000					70,000
Retained Earnings						127,900					60,000
Sales						260,000					125,000
Other Income						13,600
Income from Soda Company						8,100
		$	962,000		$	962,000		$	471,600	$	471,600

On December 31, 20X2, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3.

During 20X3, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.

Required:
a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Please help with below:

Record the basic consolidation entry.

Note: Enter debits before credits.

Entry	Accounts	Debit	Credit
1	Common stock
	Retained earnings
	Investment in Soda Company
	NCI in NI of Soda Company
	Dividends declared
	Investment in Soda Company
	NCI in NA of Soda Company

Record the amortized excess value reclassification entry.

Note: Enter debits before credits.

Entry	Accounts	Debit	Credit
2	Amortization expense
	Depreciation expense
	Income from Soda Company
	NCI in NI of Soda Company

Record the excess value (differential) reclassification entry.

Note: Enter debits before credits.

Entry	Accounts	Debit	Credit
3	Buildings and equipment
	Patents
	Accumulated depreciation
	Income from Soda Company
	NCI in NI of Soda Company

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